Walgreens ends partnership with blood-testing upstart Theranos

Theranos founder Elizabeth Holmes, second from left, at a ribbon-cutting ceremony in 2013 for the company's partnership with Walgreens. At right is ex-CFO Wade Miquelon; second from right is ex-CEO Gregory Wasson.

Walgreens told Theranos that it is terminating its relationship and closing all 40 Theranos Wellness Centers at its stores in Arizona, effective immediately, the drugstore chain announced this evening.

The break follows Walgreens' decision in January to halt Theranos laboratory testing services at its Palo Alto, Calif., location, and means Walgreens will no longer offer Theranos services at any of its stores.

“In light of the voiding of a number of test results, and as the Centers for Medicare and Medicaid Services has rejected Theranos' plan of correction and considers sanctions, we have carefully considered our relationship with Theranos and believe it is in our customers' best interests to terminate our partnership,” Brad Fluegel, the Walgreens executive in charge of health care commercial development, said in a statement.

Michael Polzin, a Walgreens spokesman, declined to comment on the original duration of the Theranos contract or to speak further about the decision.

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Elizabeth Holmes

Brooke Buchanan, a Theranos spokeswoman, said via email that "quality and safety are our top priorities, and we are working closely with government officials to ensure that we not only comply with all federal regulations but exceed them."

Until today, Walgreens was Theranos' main point of access to patients. Theranos still operates four facilities in non-Walgreens retail centers in Arizona and one in California, Buchanan said. She also said Theranos plans to open more independent testing centers this summer and into the fall.

The companies partnered in 2013 as part of Deerfield-based Walgreens' strategy to move deeper into health care services. Theranos offered technology it claimed could accurately test for diseases faster and with smaller amounts of blood than traditional testing equipment. The partners opened the initial 40 Theranos testing operations in Walgreens stores with the expectation that many more would follow.

"We are disappointed that Walgreens has chosen to terminate our relationship and remain fully committed to our mission to provide patients access to affordable health information and look forward to continuing to serve customers in Arizona and California through our retail locations," Buchanan said via email.

Theranos acknowledged in mid-April that was it under federal investigation over whether it made misleading statements to investors as it sought funding. Walgreens has been subpoenaed in the matter, according to the Wall Street Journal.

Theranos had been one of Silicon Valley's most-celebrated startups until the Journal began raising questions last year about the validity of its tests. Its founder and CEO, Stanford University dropout Elizabeth Holmes, topped Forbes' list of America's richest self-made women last year, worth $4.5 billion thanks to her 50 percent stake in the company. Earlier this month, Forbes reduced her net worth to zero.

Former Walgreens CEO Greg Wasson and his team struck the Theranos deal with no proof of the blood-testing company's technology, a machine called Edison that purportedly performed diagnostic tests using only a drop of blood.

Walgreens executives made a one-day trip to Theranos' headquarters in Palo Alto in October 2012 but were not granted access to the secretive startup's lab, according to the Journal. Though the original terms called for 40 centers, Wasson planned to open thousands of Theranos centers in Walgreens stores across the country, the Journal has reported.